Germany's New Pricing Policy Loses Appeal with Pharma

Germany used to afford pharmaceutical companies the freedom to set their own prices for products. Recent healthcare reform, however, now means that new medicines must undergo a cost–benefit analysis, which has implications for their reimbursement.

Under this new evaluation system, usually conducted by Germany’s Institute for Quality and Efficiency in Healthcare (IQWiG) under the directions of the Federal Joint Committee (G-BA), drugs are rated on their added therapeutic benefit using a six-stage scale ranging from “considerable added therapeutic benefit” to “no added benefit.” If the drug is deemed to show some benefit, then pricing negotiations take place between the pharmaceutical company and state health insurers. A drug rated as having shown no added benefit will be assigned a price under Germany’s reference pricing system, which could result in the drug being grouped with an old product and warranting a low price. Not only would this drive down revenue for the company, but also has implications for prices in European countries because many member states use Germany in their pricing analyses.

This year has been the first full year to have the system up and running—approximately 30 drugs have been assessed. The pharmaceutical industry was critical of the system when it was first outlined and some of the decisions made to date have only added to frustrations.

Comparator controversy

The use of comparators to demonstrate the benefits of a drug has been a particular point of contention, with several companies falling foul of IQWiG and G-BA’s views, despite having satisfied the European Medicines Agency (EMA) for regulatory approval.

Boehringer Ingelheim and its partner Eli Lilly have experienced similar issues with their diabetes treatment Trajenta (linagliptin). Despite gaining EU regulatory approval in August 2011, the G-BA decided that no added therapeutic benefit could be inferred from the Trajenta dossier they received, because the manufacturer had chosen a different comparator therapy to the one they specified. Based on the G-BA’s position in the subsequent negotiations held between the parties, the companies responded angrily and decided not to launch Trajenta in Germany because of the country’s pricing policy. However, since then Boehringer Ingelheim appears to have altered its position. In August 2012, the G-BA agreed an application from the company to submit a new dossier. Boehringer Ingelheim now has three months in which to submit the new information.